This is a virtual spaceship in the video game EVE Online…
There are tens of thousands of ships like this floating around the game, but this particular
one is special… that’s because it costs as much as a second hand Toyota.
Why?
Well we will get to that, but the answer can actually tell us a lot about the state of
our economy in the real world.
Now this this is going to be the forth and final instalment in my serious on EVE online.
I only ever planned to do one of these video’s but the more I started to learn about the
game the more the players reached out to me to tell me about some crazy business deal
or economic system taking place within this virtual universe.
But because I promised myself I wouldn’t turn this into a channel were I exclusively
geek out about video games, I am going to look at three smaller topics in this video
so I don’t feel as if I have left anything out.
Now these mini topics are…
A look at the self imposed recession the game is in at the moment,
how this game is breaking our traditional understanding of the market for collectors
items,
and finally what would happen to this video game if it allowed the trade of in game assets
for real money (thanks for the suggestion Saint Michael),
So it’s time to learn How Money Works to see how this video game keeps on surprising,
gamers, economists and wannabee youtubers alike…
… A few years ago the galaxy within EVE Online was facing a problem.
Abundance.
An abundance of materials, an abundance of fuel, an abundance of high paying income sources,
and an abundance of safe space to harvest these materials, fuels and space shekels.
Now while that might sound like a really good problem to have, (and it would be in the real
world) It does cause some problems in a video game.
The biggest problem simply being that is boring.
Try playing GTA 5 with god mode hacks turned on, after punching some fighter jets out of
the sky you are going to get bored pretty fast, and people WERE getting bored.
The largest groups in EVE online were up until recently playing a game of “build as much
as you possibly can so it becomes almost impossible for any smaller group to ever catch up”.
The fact that this is a video game and materials respawn naturally over time accommodated this
mindset perfectly, but abundance does not drive conflict.
If every country in the world had access to raw materials that respawned on a 24 hour
timer, there would be significantly less conflict in the world.
Extrapolate that out to the extreme and consider a world where there are no resource constrains
at all, “theoretically” there would be no “good” reason to fight.
Again in the real world that sounds fantastic, and hopefully in the not to distant future
we really do live in such a post scarcity society, but in a video game, even one as
dynamic as EVE online, it’s the last thing you want and so the age of scarcity was introduced
by the developers.
The people that do play eve know what this is all about, and for those of you who don’t,
, the people who make the game, not to be confused with “that”, basically made materials
far harder to come by.
They did this while simultaneously increasing the materials needed to build things like
spaceships and modules in the game.
A Titan, the largest and most powerful ship in the game used to cost about 40 billion
ISK to build, the equivalent of around $1,000 give or take a bit.
Today to build a titan from scratch would cost around 250 billion ISK, more than 5 thousand
real world American dollars.
These ships were the mainstay of the largest player empires, but suddenly these organisations
are far less keen to take them into battle because once lost, they will be VERY expensive
to replace.
This price inflation also extends down to other more common ships that get used every
day.
Even the most basic combat ships in the game have doubled in price which is ironically
enough actually supressing the conflict that the game developers wanted to encourage with
this change.
Sure, the big empires will need to fight it out to control a diminishing pool of resources
which I am sure will make for plenty of amazing headlines about epic battles involving thousands
of players, But… the average player might just decide that collecting isk has become
too hard, especially when they need twice as much of it to go out there and fly a ship
around.
In economics this whole scenario has a name, it’s called stagflation, and it’s really
bad.
Prices rising while income is falling means that peoples quality of life will decrease
rapidly and that may be what is happening here.
Since the introduction of the age of scarcity, the has seen a significant reduction in active
players, because believe it or not, living in an economy going through such serious economic
decline is not fun, even if it does involve virtual spaceships.
It’s unusual to see an economy “voluntarily” subject itself to staglfation, but for what
it’s worth, some of the largest conflicts in the REAL world have followed periods of
stagflation so maybe the game developers are onto something here….
…Most ships in eve online can theoretically be mass produced.
Even the aforementioned titans were up until recently being constructed on assembly lines
all across the galaxy in huge numbers.
But there are some ships in this game that are a little bit different, Alliance Tournament
Ships…
The game developers used to have an annual in game competition called the Alliance Tournament
or AT.
This was a competition that tested the skill of the top players in the game to see who
was best at shooting their opposition in the face.
The reward for winning or placing in this competition was a selection of ships that
were limited in number (normally to 50 each)
It’s kind of like if the Olympics gave out spaceships instead of gold medals.
Anyway, the thing with these ships is once they are given out, that’s it…
There are no more.
If one gets destroyed, well then only 49 of them will remain in existence.
That one is never coming back and whoever was flying it will either have to buy one
of the remaining ships, or never fly that ship ever again.
Now of course given their rarity and prominent history, these ships become collectors items,
and expensive ones at that.
BUT!
Most of these AT ships are also REALLY good in the game itself.
For people that don’t play the game think of it like being able to use a formula one
at your local go kart track.
But here is the thing, their price actually depends a lot more on how good they rather
than how rare they are.
There are some of these ships where only a dozen or so remain in active circulation,
but they may not have stats in them game to make them that competitive.
Now normally to high end status goods like this, performance doesn’t really matter,
a Rolex objectively keeps worse time than the phone in your pocket, but people pay for
the prestige of the item, because they are rare, and can be used to impress your friends.
Now this is typically thought of as a supply side issue, there is a limited supply of these
collectable items so only the people people who are willing to pay top dollar for them
ever get any, but this dynamic here, shows that the demand side might be a bigger factor
than most people realise when studying these bizarre marketplaces.
Now despite all of that you might still think who the ___ uses something so valuable in
a video game when it could be lost by something as simple as your internet going out?
Surely that takes a special type of person right?
Well anyway this is mine… and I am very proud of it.
Not really, but thankyou to the anonymous viewer who let me borrow it to take this footage.
I don’t know why they did, scams are totally allowed in this game so I could have just
kept this and he would have been out a $10,000 spaceship.
Now anyway this crazy person explained that if they WERE given the opportunity to sell
this ship for real money, they would probably take it.
But unfortunately the game does not allow the sale of in game assets for real money.
In fact the mclosest the game has ever got to allowing this in their charity giveaways,
the most well known of which involved the youtuber Scott Manley, paying the equivalent
of $30,000 for one of these ships in a charity auction using the in game money.
Kelon Darklight, the person that sold it to him the ship then used this in game money
to buy PLEX.
PLEX is an in game asset that can be used to play the game for free, or for a variety
of other in game services, like decorating your ships.
Anyway…
Anyway Kelon then took this massive pile of PLEX and gave it to, (the game developers)
who in turn paid out the equivalent value of that plex to a charity.
A heart warming story for sure…
BUT what would happen if that PLEX could be given to and they would give YOU the money,
rather than handing it off to some charity…
In an interview the founder and CEO of the game said that this was something that they
might one day consider, but the thing is, the game has now been around for close on
20 years, there are some people that have played for a seriously long time, and built
up some seriously huge fortunes.
Opening the floodgates to being able to convert those fortunes into something that could buy
a house or a car rather than just internet spaceships is going to cause some problems
short term.
Mostly everybody will be trying to sell off everything they own which will make the price
of in game assets fall, and the price of PLEX (the item that is required to facilitate this
exchange) skyrocket.
Now this means that most players wouldn’t actually be able to realise the market value
of their internet spaceships and would likely end up only selling them for pennies on the
dollar, but it would be good for those people that actually pay money to enjoy the game
so it really is not as crazy an idea as most people think.
In the short term it would be chaotic, but long term it may genuinely add a level stability
to the virtual economy and make all those headlines about million dollar spaceship battles
all the more relevant.
Now if you’re wondering who pays for those battles these days, go and watch my other
video’s on the financial system of EVE online, and if you have another video game you would
like me to make a video on please comment it down below so that you can keep on learning
how money works.